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tv   Bloomberg Markets  Bloomberg  October 30, 2015 10:00am-12:01pm EDT

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bloomberg world headquarters in new york. what a week we have had so far. here is what we are watching at this moment. after the truck maker struggles to fix it to drug problems. it is permanent aiding -- it is terminating its relationship with filler door. if they get together and that blockbuster deal, why pfizer is moving its legal address overseas. that horse out for redemption. they have a chance to make up for that shocking loss. the triple crown winner. thelet's head straight to
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markets. matt miller has breaking news on the economic front. >> coming in lower than expected. revised down for september. consumer sentiment coming out at 90. missing that mark. downgraded to 87 and change. board.intment across the look at the markets. they are doing worse than they were at the open. the dow now dropping about 10 points. the nasdaq still gaining the right now. you can see the reasons for that s&p index here. chain -- mixed traded
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today. across the energy patch you had earnings eat estimates. exxon is the big loser and the weight on the index. as far as pharmacies that are very closely linked, we have earnings out there. up 10%. cvs coming in line. also raising its outlook, down right now by 5%. some take mrs. -- there have been misses yesterday. in general october is a very strong month. and the second-best october in the last 10.
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>> those health-related stocks taking a stand. i want to get to julie hyman. let's get an update on what a last-minute saying. julie: bill ackman's conference call as well into the thick of it and will go on for quite some time because of the detail analysis of the company. valley and should have done a better job of public relations and government relations for that matter. clearly --del more he is talking about where the company goes from here. he says life will go on. time over spend some
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large pharmaceutical companies that have been sanctioned for practices. the company then ended up paying a fine on and the in-house these cases tend to get a lot of attention at the beginning. he does like the pharmacy model. it gives these pharmaceutical makers and other channel to consumers. he claimed it saved patients money and made these drugs more acceptable. , heerms of his knowledge found out when all the rest of us did that valley and had an
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option to buy filler door. he asked what your practices, under legal scrutiny? he says the company was not able to answer. for all the folks who have a bloomberg terminal. you can follow along on -- follow along with the call. live bloggingers the proceedings of this call. >> this information was never raised. we are going to get back to you and you are going to keep listening to the call. certainly covering this in the next few hours. vonnie quinn has more from our news desk.
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>> the government attack killed 40 people today in the suburb of damascus. looking for ways to end the syrian crisis. secretary of state john kerry is russia's backing a sod and says the only purpose is to resolve the conflict. the crowd pushed and's shoved -- and shoved. 4000 people are being held waiting to cross. than 100 -- more than .00,000 people entered president obama is eager to sign the two-year budget deal.
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breaks the cycle of shutdowns and manufacturing crises. our first viewt right now. betty: thank you. vonnie quinn with your headlines. the energy sectors reporting the largest decline out of all the other 10 sectors of the s&p. all reporting third-quarter , sending three out of four stocks down. 66 for insurance -- for instance. for more on energy market i want to bring in john hofmeister. he is a member of the u.s. the
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permit of energy. john, i know you said you do believe oil prices will rebound. continuingil prices -- the dividends are at risk for this company. why do you want to be interested in an egg -- in any energy stock? >> if you consider the overall history of these companies and their ability to weather the storm and take the tough decisions they have to take, i it. is the buyer -- i think is the buyer's decision. in question is when to get or just stay in. investors just stay in for the
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long term. those that are protecting their -- hold on tong their long-term shareholders. betty: take a look at your former company, where they had to sell assets to cover losses on operation and to protect that dividend, which raises the question how many more assets can shell sell before they have to feed into that dividend? how much longer can they weather the storm? john: i have great confidence in the likes of john watson, these folks have been through the storms before. making some very tough
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decisions, which is actually value destroying. you have to do what you have to do. with prospects on the horizon, let's say the acquisition of bg, however and the acquisition of baker hughes, the companies are resilient, they can handle the risks. as bad as the oil price and consequences may be. needs 93 million barrels of oil today -- of oil per day. you see the success of the downstream companies, which truly have help the major integrated companies. they will continue to do well with this low-priced finished product. is a built-in natural resilience to be in the upstream and downstream. >> some people say we have seen
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oil prices so low nobody is talking about big mega projects. to be for oil have companies to start reinvesting and start saying let's look for the next big one? >> there are two dynamics we should watch, and the consequence of those is we may all walk around wearing neck braces as the price snaps back. how much will the banks loan the company's? particularly small independents? will the trust the rebound is for real? companies that are out of assets come out of cash, they are going to have a hard time with their banks. the second dynamic is when the capital spending increase on the part of all the majors and others that have the confidence
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that they can spend the money now and return to their investors on the basis of take capital projects. >> re: above 60, above 70? confidence, to be people are not going to snap back into a high invest and round of $60. i think you are going to need to see 80 and above before people make major decisions. they are going to make sure that 80 last for a while. i think the snap back when the oil price starts to rise again, because of all the push out and slowdowns in capital spending, i think we are going to see high prices for a sustained period until we realize we should create a competitor for oil products like natural gas. natural gas should be a natural inclination to get away from
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this volatility in oil. volatility is killing the industry. betty: we will see. we will have to leave it there. john hofmeister, former shell president. much more ahead. il ackman, as we just saw, come to the defense -- bill ackman, as we just saw, coming to the defense of valiant. julie hyman is monitoring the conference call. and the allergen is nvestigating -- plus a farewell from america's triple crown winner. win inpull off another racing's richest event?
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that he banged welcome back to the bloomberg market day. betty: welcome back to the bloomberg market day. fixing antilock brakes and airbags. up in thean build antilock brake module, disabling the system and the electronic stability control. deeper into the northeast with a one point $1 billion purchase. the deal creates the largest commercial bank in the united states. chevron, just reporting on oil companies, will post the fourth
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straight quarterly loss. first-quarter net income was over 2 billion dollars, nearly $4 billion less than the same period a year ago. chevron says as many as 7000 jobs will be cut if the oil price slump persists. newsan get more business at bloomberg.com. i want to get to julie hyman with an update on bill ackman's conference call. estimatess given some on his company business. the core business proposition has been overlooked. by 2020 the company will earn $22 per share in earnings. he is estimating a double in earnings by 2020. she says will be pretty vital to
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it in terms of borrowing. we listen briefly to chat with you, he is comparing this to a scandal. he's trying some historical comparisons. >> thank you so much. julie hyman on that call with bill ackman. also listening on the call. let's talk about phil and door. -- what is it me for valiant? >> the reason they severed this relationship, our reporter out west broke news last night that
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they were altering. they have been written by doctors to get brand-name drugs. there was talk of shopping around around our misuse to get drugs covered. the question of severing ties, are they going to be effective in proving they didn't have something to do with this. is can the big big question of what do people know and the investigation will be the -- will be is there a lot of focus on that? or is it something wider spread to valiant? downompany is being shut right now. they said so in release this morning and they are no longer going to be associated.
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almost certainly they are going to find ways to get these drugs to patients. you now have to wonder what is going on in their business and how much of the super aggressive practices will be affected by that. betty: essentially fudging doctor prescription so they can get more on their reimbursement. that is a serious allegation there and it does raise the question about why valiant to more to diligence on this company? true: is there more we don't know about? we broke the story in a matter of days. inevitably there is going to be internal investigations, probably legal investigations.
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betty: we will be with you in a bit to talk about valiant. we will be back with much more on the market a.
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>> we have been talking about china's wild domestic stock market did the mainland market may be getting its moment in the sun. here to pick out some etf's benefiting from this is etf analyst -- has been market insane. it seems crazy to go in there
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and buy this stuff. people are doing that. >> it was up 100% and went down more than that. see is the debt market is outperforming stock by 6%. anything is less a volatile. investors rotated into the debt market. there is another catalyst coming up, which is the imf is looking to add the u.n. to the chinese currency. that could be a big boost for chinese debt. third-largest that market on earth, but only teed up percent foreign ownership. hooked up with hong kong advisors that have quota.
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bat -- the bond you are looking at. obviously that would be a more if the u.n. is added to the special drawing. etf, that market is about 1% of the real mother load, which is the mainland market. that is three or four years old. to market sector is trying bond etf speed past corporate, past aaa, had the duration of four years. pretty good considering the investment grade.
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it is cheap, 40 basis points. cheap as the equities. global x has one similar to market vectors. it is basically looking at and ultrashort debt. but it yields 1.5%. kc ny. matt: a much more with betty liu ahead. stay with us on the bloomberg market day. . .
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world live from bloomberg headquarters here in midtown manhattan, you're watching the bloomberg market day.
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i'm betty liu. friday a busy, busy morning. bonnie has more from our news desk. a man back home after 15 years, freed from a prison last night or it his release came an announcement by prime minister david cameron. 2 shipwreckswn in today. nearly 600 people have been rescued in the last 400 hours alone. dynamic international airways 757 was taxiing out of the there was a fire in the engine room, triggering emergency slides.
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after months of hesitation, the endorses hillary clinton. bill de blasio says that hillary clinton is the candidate best suited to navigate washington. de blasio managed her campaign when she was elected to the senate back in 2000. boutmpion taking his final tomorrow. it will be american pharoah's last race. he could bring in as much as $2500 a year by fathering a new generation of resources. -- race horses. you can always find the latest news on bloomberg.com. betty: let's hope that he goes out on top. [laughter] vonnie: no comments. betty: vonnie quinn.
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break this all our guest ande zach meyer who covers tax inversions. and he won a prize for that coverage. let's start with you on this deal. are they the right match for each other? allergan is a good company. it's a good target for pfizer in some respects. it is big. everyone has been waiting for pfizer to do something big. it's expensive. and there are not as much operational synergies as pfizer could get from other targets like a glaxosmithkline. you are betting a lot on these tax benefits can make this deal attractive and that's a risky bet to take in this environment.
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betty: is this all really about taxes here? i am sure that pfizer has other issues -- issues to want allegan. it would not make sense if it were just about taxes. astrazeneca, with analysts were estimating that pfizer could lower its taxes by per year.on that's added right to their profits. that is a real benefit. betty: it is. given that, with the steel have come together without the tax benefit? brooke: sure. allegan has a lot to offer here, but a big part of it, i think, is the tax benefit. the pfizer ceo has been very vocal about one in to lower his tax rate. i think of that were not so
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important i think he would give a harder look at some of the u.s. companies. betty: are there other suitors? might this come into a bidding war at all? brooke: it is such a large company. if you are that big, do you really want to go up against pfizer? probably not. betty: they have a lot of firepower. zach, how will this go through regulators? : from a regulatory perspective, the irs probably would not have any reason to challenge it. the real issue is pfizer willing to stand up to the political heat. people like donald trump are already talking about turn to do something about inversions. carl icahn says that he will toate $150 million super pac attack the issue of inversions. betty: i recall earlier this jack lew coming out
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and really lambasting these companies. does the treasury department have the power to do this? i think the obama treasury department has done most of what it can do under the law and that clearly was not enough to prevent pfizer. betty: could this trigger a ne activity?m&a brooke: i do think that there is more to come in health care. that iton -- the fact has not slowed down already should give you an indication. and there are companies that have needs. they need to replace these blockbusters going off patents. i definitely think there will be more deals. at the same time, allergan is expensive. these other deals that companies are doing are expensive. they have to wonder where is the pop. is there anything unique
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about the structure we might be hearing between allergan and pfizer? brooke: sure. these shareholders of the u.s. company, you want to make sure that they do not own more than 60% of the combined entity, in order to avoid the stricter guidelines the treasury came out with. using equityook at to pay for a deal or cash to get that kind of ownership structure. you can go above that, but you will be dealing with these guidelines. ach, you mentioned the candidates who had come out with this. pre-module of the front runners. is there anything more than rhetoric? when they get into office, can they doing in question mark zachary: -- can they do anything? democrats andry republicans talk about how much they do not like conversion.
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of there has been this kind almost, may be consensus for years and we have not seen a bill go through congress for various reasons. people disagree about what to do ath the short-term tax that change would raise, and we disagree me long-term about whether we should ultimately lower taxes or increase spending somewhere else and pay down the debt. betty: it sounds like now it makes for good campaign rhetoric. there's not much teeth behind don'tchary: --zachary: hold your breath for corporate tax reform anytime soon. betty: thank you both for joining me this morning. much more ahead at bloomberg market day. his lastpharoah runs race this weekend. bill ackman trying to calm down fears about shares over
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valeant. stocks headed to the biggest monthly gain since 2011. however, did janet yellen killed the rally here? we will discuss. ♪
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betty: welcome back. we are just over an hour into the bloomberg market day. time for the bloomberg business flash. saw 40 minutes ago, rising life than forecast this month, according to the university of michigan index for over -- americans see conditions
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as less favorable. still lower borrowing costs could add to more spending in the holiday season. soaring margins in fuel. the profit at the company refineries double to $2 billion. earnings beat estimates by $.13. exxon has topped expectations six times in the last seven quarters. and drugmaker abbvie reported third-quarter earnings that beat analysts estimates. abbvie says it has a long-term plan with financial goals for 2020. they are developing new drugs to replace one that generates more than half of its sales. you can always get more business news at bloomberg.com. caughtis time to get you
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up on all of the action overseas. let's begin with asia. one big story out of the region -- the bank of japan. as you can see, did not step up its monetary policy from already record lows. up 7/10 of 1%. the hang seng and the china shanghai composite, a little bit softer in asia. oil for, they blamed missing is to present inflation target. we have this from hong kong. reporter: the bank of japan itsmed below for missing inflation target. the central bank delayed it cpi goal by another six months. the governor of the bank of japan says they will not hesitate to adjust policy if necessary, but talk about a close call. economist are split on the mixed economic data.
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local reports say the government the extra budget if there quarter gdp is a point. man they are in -- there in hong kong. abigail doolittle has the latest on stocks. ship stocks one fire. this is up from an original offer of 1050 -- $10 of these as per share. this comes at a record year for m&a activity in the semiconductor space as these some come together in the face of searching costs and declining customer base. pmc today is trading at a record high. turning from chips to hard have results today
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from the fiscal first quarter, beating estimates on the top and bottom line. but earnings and revenues are down sharply from a year ago. the company says that is due to lower than planned enterprise demand. shares are up 15% this month and on pace right now for the worst year since 2008. ready? abigail doolittle live at the nasdaq. we will be back with her in the next hour. now to julie hyman with more on bill ackman's conference call. julie? questionsis taking on that have been written to him, reiterating that there is value in his business. scenario,rst-case maybe valeant could sell itself -- as it is right now at eight depressed valuation -- add a depressed by eurasian. unclear how serious he was about that sort of suggestion, but it certainly got a lot of suggestion of the -- a lot of
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attention from the folks listening in on the call. he is emphasizing the stock should be higher than where it is. he's as the market is not realizing the value in value. he says that the stock is 89% earnings -- given his assumptions, even taking out pharmacy the specialty company with which valeant has severed ties and is now closing. he still has confidence in the company. he says it could do a better job communicating with the public and be more transparent. he says he has repeatedly encouraged the company to staff up in terms of its public relations. person andy have one handling public relations, government relations, investor relations. it sounds like valeant will be expanding that role to some extent here. all of this, by the way, not
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helping the stock. we are seeing it bounce off the lows of the session, but still down by 4% today and off sharply since before all of this began. and remember, just for context even have thisu controversy and questions about valeant's relationships with the specialty pharmacy company, the bounce began before that, when hillary clinton first tweeted she was going to look into regulation of high drug pricing, because valeant's claim to fame before all of that is they acquire companies and raise the prices of rugs they have acquired. remember that for context here, betty. drugs they have acquired. remember that for context, here, betty. betty: and this is bill ackman hosting this call. valeant has decided not to host a phone call on this? this particular
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topic. valeant did i host a call talking about its relationship with philidor, but did not decide to post a call saying that it severed that relationship. and by the way, bill ackman saying he did not know about valeant's option to buy philidor for nothing. it paid one minute -- $100 million for the option to buy for zero dollars for the next 10 years. he did not know about that until that was disclosed. he knew about that news item when the rest of the public did. do you know if we are also seeing this affecting the -- the other ones, we havefor instance, seen valeant and some of the other drug makers, including abbvie, which got taken down.
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hase: that correlation faded somewhat. we have seen other pharmaceuticals like indo pharmaceuticals take a hit. have come companies out -- not now, but initially with this whole fee for service, came out and said very forcefully we do not have any kind of ownership structure with the specialty pharmacies, so most of those stocks have not performed like valeant has. hyman,thank you, julie listening in on that call with bill ackerman. but switch gears. let's lighten things up a bit. consumer. about the consumer spending accounts for about 70% of the economy, driving u.s. growth and overseas demand slowing down. with dottiet down madison to find out what she is
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watching. >> customers really want service. that is why customers go to amazon all the time. amazon says what is going to do and does it. two-dayshipping is shipping. focused on in the luxury sector and holmes is service. how to be a gracious host, how to be a gracious guest. and we were just having a conversation about big-box. that is really about doug macmillan at walmart. brian carnell. it is about consistent delivery to the customer service. what do you do about the fact that people can go in your store in showroom and question marks the all of your presentation, say thank you for that suggestion, i'm going to buy it elsewhere? >> exactly paraded or i have my cell phone on me. i may order it right here.
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dottie: on high and things like lighting or more accessible things, we match price and we do not play a high/low game. reasons we of the can win over time is we do match price with competitors. your goods nature of changed over time? it used to be i could buy lightbulbs a gracious home. i think of gracious home as more higher-end. have you shifted your merchandise? someone is yelling at you on a saturday morning about why that light is out in her closet -- betty: that was the ceo of gracious home and former walmart executive dottie madison. still ahead on the bloomberg
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market day, he might be the greatest athlete of our time. we are not talking jordan, brady or manning -- we're talking american pharaoh, that one. we will talk about that in a moment. ♪
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betty: welcome back to the bloomberg market day. i'm betty liu. is the richestup race in north america, the defining event of the international racing season. is triplethe favorite crown winner american, who will retire after the race. joining me, david gora, who recently spent time with the breeders' cup ceo. this is a relatively
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young race. those races have been going on for decades and decades. this started in 1984. this is the first time in history that the triple crown winner could you. but the excitement for american pharoah has only gotten greater as time has come by. and this is his last race, so there is excitement there. numeric in pharaoh has won $5 million in his career, but this is $5 million itself. -- american pharoah has one $5 million in his career. david: the economy is so fascinating. yes, you make money as a racehorse, but it's really the retirement career where there is more money to be gained. after this race we will see ked acan pharoah truc couple miles away where he will be a stud horse for many years in the amount of money that he can make -- it could be hundreds of thousands of dollars each
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time he made with a horse. that stands to make hundreds of millions more. betty: did you meet american pharoah? david: i did not. i've met the guy who owns his father. that course makes $150,000 every time he is studded. that economy is very vibrant and alive. it strikes me how this has become an international sport in an international industry. you see horses come from all over to these races, but really this is where the center of it is, the history of it is. moment in history. the breeders' cup, these are not races on one track all of the time, right? david: it moves around. it was in california. they made the decision to bring it to kentucky. track.very storied they built chalets around the track so people could watch. earlier, you mentioned,
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david, how much the course can make in retirement, but what exactly do these forces do in requirement? in these horses do an retirement? david: you think of it as a very lavish life. but it is a gamble. for the owners. not all of the triple crown winners have been great readers. -- breeders. it is a gamble of the track. it's a gamble in retirement as well. you so much. thank here.gura you more oniving the conference call with valeant. you can also follow it on the terminal. ♪
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betty: it is 11 a.m. in new york, 3 p.m. in london, and 11:00 p.m. in hong kong. welcome to the bloomberg market day.
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from bloomberg world headquarters here in new york, good morning. i'm betty liu. here is what we're watching at this hour. bill ackman on the defense. the investor explaining his money losing bet on valeant after the company announced it is terminating that controversial relationship with specialty pharmacy philidor. and hedging your bets. investors may be having second thoughts about these kinds of hedge funds. the big names with big losses. we go through them later in the program. and in technology, lift off for linkedin. siteob networking searching after a better-than-expected forecast. there 90 minutes into trading session so far on this friday. let's head to the markets desk where bloomberg's matt miller has the latest.
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are staying your little bit in this rally. matt: a little bit. as you said, it is friday, the last day of the week, the last eight of the month. the index is moving around a little bit. it doesn't make much difference when you pull back and look at the mug career. in my terminal, i pulled up seag. it gives you a seasonal look at the indexes. i put a heat map in here. the average gain for october is a .1 percent. we are looking at a gain of 8.7%. it is the best month of the year and the second best october in 10 years. take a look at the big movers. linkedin is doing rather well. that is after saying it will see
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8 billion dollars in revenue. expedia saying it will get more tiergies from its orbitz up than previously estimated. so, you see both of those stocks gaining, gaining big. 11%, gains there. take a look at first solar. it is the biggest gainer in the s&p 500. the reason is not something first solar did so well, but something that solar city did badly. solar city disappointing on earnings. also disappointing in its outlook and saying it will change it so strategy to a cash flow strategy from a growth strategy. as a result, investors are selling off that, almost a quarter of its value and buying into first solar instead. betty, back to you. betty: ok, pretty volatile for
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the stocks. we are breaking news right now. president obama authorizing some special ops forces in syria. this is just breaking right now. let's get to brendan greeley for more. brendan? as secretary of state john kerry negotiates in the enough for a political solution, president obama has authorized what he has called a small complement of ground troops -- no more than 50 -- special operations troops that are going to be going to northern syria where they will cord make local ground forces. he is taken a number of other measures. he has authorized war hawks and f-15s to an air base in turkey. he is also consulting with the iraq.minister of as negotiations continue in vienna, we have actual forces on the ground that the president
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is authorizing in syria. that is a monumental step. betty: ok. president obama also says that he is eager to sign legislation to stop the government from defaulting on its debt. the senate gave final approval to the measure earlier today, which gives the government the authority to keep borrowing until march 2017. and it lifts budget caps. campaignio canceled a stop in iowa so he could focus on the budget bill. and jeb bush brought up a call for him to resign because he has missed up so many votes. bill de blasio has been organizing his own coalition. he endorsed a hillary clinton for president. -- thebecame manager
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campaign manager for her bid for senate in new york. you can always find the latest news on bloomberg.com. betty? betty: brendan, thank you so much. let's bring in true armstrong was again to talk about this call and what is next for valeant. also the founder of veritas research joining us from toronto. i want to bring him in as well, but drew, let's start with you. what are we hearing from bill ackman on this, on valeant? into yet, we are two hours his defense of valeant and investment in it. he has made a couple comments that are noteworthy. he is saying that he supports the management of valeant, ceo mike pearson, who issued a statement when they said they were shutting down this ian cutting ties. stands withthat he management. he says that management is capable and good and they will get past this area he also mentioned a combined pfizer
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/allergan. the combined company buying valeant as one possible outcome of this. a lot of what he has been doing is sending the investment, saying we will get past this and the company needs to do a better job of public relations and investor relations. ok, anthony joining us from veritas. we have talked before. anthony: can you hear me? betty: yes, we can hear you. i know you are on skype, so we can be touch and go. you are looking little fuzzy right now. anthony: i'm sorry. betty: anthony, what you make of valeant cutting ties to philidor ? i'm -- i find it very interesting, because on monday they did not
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understand everything that philidor does. ok, you know, we will have to get back to you, anthony, because it looks like a fadingion with you is there on skype. we will try to get anthony back on, perhaps by phone. , what is next for valeant here? we have more questions than what has been answered here, because now it is like, ok, where are here, in bodies buried terms of their relationship with other companies? what is next for valeant? see ai think you will couple of things, and they will come from inside, not outside the company. the board has a committee and they are supposedly doing internal investigating on exactly what happened here and what happened. you will also see external bodies.
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law enforcement. if the be surprised congressman do not have something to say here. this will probably involve subpoenas. thatin mind, the news broke last night about altering prescriptions and shopping through pharmacies. that type of scandal. possible.ely ackman has been talking about this on the call. this could be a multiyear process. we are looking to find out in the short-term, are there more scandals, are the more skeletons in the cause of that valeant did not know about or did not disclose? longer term, we're probably looking at an investigation of possible significant liabilities. we know that valeant andrewhas filed against bailednd shareholders of
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out of the company, but is anyone talking about a case against valeant? drew: you know, i think we will be hearing a lot more about that in the coming days. there will be word of an investigation at some point. keep thattry to investment quiet. they can take months or years to unfold. already been in the crosshairs by some democratic presidential candidates, members of congress who are democrats as well. betty: thank you so much, drew. drew armstrong who has been keeping on top of this call from valeant. and julie hyman has been saying on top of the skull as well. julie, bring us more highlights. -- on top of this call as well.
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julie, bring us more highlights. get an extremely, extremely detailed analysis of this business. there is the timeline of valeant, of other companies in situations he is likening to valeant and you also get the colorful commentary that is typical of bill ackman. he is calling for very well known wall street pr firms, saying they did a great job for herbalife. bill ackman very famously shorting that stuck in a horrible job, he says, for valeant. apparently they represent both firms. he is calling out them for their representation of valeant in this case. at the same time, ackman continues to reiterate his faith in the company an investment in the company. 18%ne point he said 19% to of pershing square's capital is tied up in valeant.
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it is one of his largest investments. the call today devoted to making his case as to why it is still a good investment. ok, thank you, julie. much more ahead on the bloomberg market day. many hedge funds are investment funds have lost money in valeant. we will look at the winners and losers so far in the hedge fund world. ♪
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betty: good morning. back to the bloomberg market day . up less thaniment forecast this month according to the university of michigan's
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final index for a over. low borrowing costs could lead to more consumers spending through the end of the year. profits dropped again at chevron. chevron's third-quarter net income was two billion dollars, $4 billion less than the same time a year ago. chevron will be cutting as many as 7000 jobs. and another carmaker recalling vehicles. this time fiat chrysler, suvs.ing jeep, dodge there are problems with antilock brakes and airbags. you can now get more business news at bloomberg.com. back to the markets desk were matt miller as a check on the company movers right now. matt: let's first look at the indexes. not a lot of change. if you look at the specific movers, especially abbvie, you
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will see gains, and in fact abby is one of the biggest gainers on the s&p 500. it was earlier -- yes, it is there. it not only beat estimates, but raised its full-year forecast to 69 a share. abby is doing quite well, especially if you compare to and stocks outer there. cvs disappointed with its forecast and falling today. the drag is really be financial stocks. the s&pake a look at 500 financial index it is the biggest loser of the group. you can see it down 7/10 of 1%. heat mapow you the function that will sort out winners and the losers today.
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you can see what is going on as for is the industry groups. utilities are the biggest gainer here. said, the, as we biggest losers. health care staples -- you can see we broke it up half-and-half. that is why we are seeing some up and some down. if you drill in to financials, and i will do that right now, you can see the biggest losers and the group -- i believe jen werth is one of the biggest losers here, and the reason is that jen worth had a loss that is bigger than expected. not doing well. down 10%. losing a full 10th of its value and the biggest loser on the s&p 500. betty, back to you. betty: staying with the markets though, because stocks are headed to the biggest monthly 2011.ince but is the fed throwing a rate
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hike and cold water on the rally? er, is her, is the -- oliv the fed going to put a stop to this rally? so far they have given a nice little boost to the rally. if you look back at september there was a pretty clear option when the fed did not go. at and they did not go because they were a global growth machine. after that, the markets held back. then be fed backtracked. of in have another sort between announcement from the fed. and theoved the topic owners said it would be a large concern for us. it's interesting. talking about traders. there are a lot of elements compounding -- just the general stock market
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reaction. a lot of times been fed, you get choppiness. it goes away. but we have a sustained movement down. it's actually unchained. and when you think about what is different from the market versus the beginning of the month -- earnings are better than expected, but they are still weak. up fact is, the market move slightnt based off of a change in wording -- i don't know. it's a little bit curious. it is curious, but i'm curious about the idea of the fed could stop the rally because it good that they are downgrading fears about global growth? and isn't it good that they think concessions are good enough they could raise rates in december? that is all good for the economy, no? oliver: i think so. look, there is a different mentality.
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there is a real regime change in the stock market. there has been a regime change just in terms of the sectors that are winning -- who is winning right now? materials come industrials, that is what is leaving us out of the rally. removing the punch bowl will make equity investors somewhat nervous, but if they make it under the right conditions, people will be happy with that. betty: industrials, materials, energy during this rally -- are they the ones likely to continue question mark is that an opportunity to buy? oliver: i think that's a really interesting question. does the rally in these companies that were up before the selloff -- the fact that the rally is based on those companies, is that a good thing or is this just people going in a buying some cheap stocks? i think that's an important
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question. what is going to happen as a the -- f the fed, financials did well on wednesday. they really ripped on wednesday. you would expect utilities to come off and the big picture, as the u.s. titans while the rest of the world's easing, that will continue to exacerbate what we have seen with the dollar and have an effect on multinational companies. given that big caps were part of the rally, it will have an effect on the market. betty: thank you so much. oliver renick there. the holiday shopping season unofficially begins this weekend. water consumers looking for? botharget and walmart think they have the best deals for you, next. ♪
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betty: welcome back to the bloomberg market day. it is the most wonderful time of the year. millions of american consumers getting ready for the holidays just around the corner. more than half of holiday shopping will be done online and more than half of those shoppers want free shipping. that is an important factor on where they shop. target is hoping to win the shopping war with walmart with preholiday shipping. we want to bring in our correspondent who covers retail for us. shannon, is this new for target, free shipping? they started last year after a real big push to win back shoppers after that disastrous holiday in 2013 when they got hacked. they are doubling down this year saying free shipping, you can order a $10 toy and they will ship it for free.
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why isn't walmart doing this? shannon: walmart is taking a different strategy. they are incurred to people to order things online and pick them up in the store where you can do that for free. a lot of times they've artie ship the items to be sure. but walmart wants to get you in the store, because it is no surprise when people walk into a store even if it is just to pick up an online order, data shows they spend more. the in-depth buying something -- they pick up a little thing. -- i'm in the store areas i'm in the store. walmart is making the gamble you will make that $50 minimum purchase, pay for shipping, or you will come to one of their stores. they are really pushing this. it partly makes sense. you will go, you will buy. we spoke with the walmart ceo a few weeks ago and he talked about how they are trying to change that strategy to get more consumers to shop at.
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>> next year particulars where and wessure point is improve earnings going from there. the bottom line is we have to get this company is efficient to in the longers term. we are developing a technology company with an walmart. and the investments we are making at the store level on top of that is precious. betty: how important will be a holiday season be for them? shannon: i think it is really important. this is the first full year that doug macmillan, the ceo, has had his strategy in place. the first holiday, i should say, where he has really had the strategy in place of improving the stores, improving online, investing all of this money. yes, he was ceo last christmas, but it only been there for a few months at that point. they are improving the website. they hope it will pay off. longer -- walmart is taking a longer term view. they are not going out and saying this holiday will change everything. betty: not make or break.
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are monitoring expectations. target, we see about half of their choice sales for the year get done in the fourth quarter. betty: wow. it makes sense though. shannon, thank you. shannon pettypiece of bloomberg news. still ahead, bill ackman defends his stake in valeant. we will take a look of the activist world. big names backing up big losses. oflook at the performance activist investors. ♪
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betty: live from bloomberg world headquarters you are watching bloomberg "markets." i am betty liu.
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brendan greeley has more from our news desk. willn: -- brendan: they correlate with local forces to fight islamic state militants. fewer than 60 americans will be involved. the president also authorize sending more warships to turkey. the rockets struck the syrian capital of damascus. that happened as diplomats met for a second day in vienna to try to end the syrian civil war. says the talks are only two and the conflict. they say it is up to the syrian people to decide the future of president al-assad, who is backed by russia. he is eager to finance. the senate gave approval today to effort a debt default. it lists budget caps, an extra spending.n in
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investigators trying to figure out why passenger jet caught fire as it prepared to take off from fort lauderdale, florida. the 767 was taxing to the runway when an engine caught fire. they were evacuated using emergency supplies and only one person was seriously hurt. the world series resumes at citi field in new york. the kansas city royals won the first two games. royals ventura or the and noah syndergaard for the mets. that is the first word news. you can find the latest on bloomberg.com. go mets. you are know who rooting for. let's go to julie hyman on an update on bill ackman's conference call on valiant. to .5 hours. he is famous for long presentations. was 100 60nning it
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questions, and he said he was going to answer every one. bill ackman is arguing for his investment in valiant saying indoor. country will an investigation into its practices in terms of its relationship with philidor, that could go on for two to four years. he says that their core value is in tact. the shares, after making a run off of the lows are headed back down, and are now down by 9%. looking at their year to date performance, we see a decline of 30%. it is wall street's darling as involvement illustrates. they fell first on concerns about drug pricing, then the relationship with philidor. talks about the business and value proposition being in tact, that means that valiant is a role of company.
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it buys other drugmakers. in some cases, it does raise prices. look at the history. this is a buying history of valiant. say lex is the largest acquisition as of late. the blue lines are the side of the value of acquisitions, and the value of acquisitions. it has made quite a number of acquisitions over the last several years. even though the company may sell its neurology unit, and invest more in rmb, bill ackman said to not expect it to transform into a country that spends like other drug makers on research and acquisitions. in other words it spends a low percentage, 3%, on the research and development of new drugs. it prefers to acquire the drugs. 13%.eers spend
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do not expect the ratio to rise to that level. eventually, the company will come to a place where it can make more acquisitions. here's the market cap of the company and the tumble it has seen. if it buys allergan, maybe they can buy valiant. betty: already thinking about the next step. julie hyman, thank you. the highlights of the call on valley and by bill ackman. i will get more on this in defense of the company. i will bring in erik schatzker who is very familiar with bill ackman and his work. how many conference calls has he had to hold on the market? has done an he effective job so far? the market is telling us. the market is down 9%. the answer, would have to be no. .ime will tell
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if bill ackman is right and valiant is worth $450 a share years from now, he will look like a genius, especially that he has loaded up on more valiant shares as the stock price has come down. there are other holders involved who also desperately want the lachman to be right, and a few others that are thankful they were able to hit the eject button and get out in the second quarter. the most recent hedge fund ada we have. doubt about bill ackman, his investments, and his strategies. has a better chance of going to zero then herbalife ever will, trying to update the full story on monday. dirtier than anyone has reported. erik: that is a tease, isn't it?
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betty: the founder of the activist on the tracks of the activity of the investors. do you think things like this, perhaps not to bill ackman's opinion, but to others, a wrongheaded to fall on valiant tarnishes bill ackman's reputation or the reputation of hedge fund managers in general? >> the answer is no. most of the investors, including dell, have significantly overrformed the s&p 10-15-20 years. i find it interesting how the commentators praise the virtues of long-term investing and criticize activists were short-term investment, which is an unfair characteristic. it is more unfair that they join -- that they judge them on a short-term if they only have one -- one bad stock, even if they have been outperforming.
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they are not going to be right 100% of the time, nobody is. the thing with activism, it is a public strategy. are you are wrong, you wrong publicly. when you are right, you are right publicly. a lot of the other portfolio -- erik: mbia for example? the public wind is nice, but there are public glasses, and that is the part of being an activist. betty: you follow a lot of hedge fund managers. they have had tough years? value driven activists, like a bill ackman, you could put david einhorn in that, though he is not as public as ackman. ackman is far from being alone. carl icahn said -- betty: he is had a good year. erik: he is very loud as well. betty: that is what i mean.
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does not holdhe three-hour conference calls, but he is not shy about letting you know what he thinks. betty: he knows how to use twitter. erik: he knows how to use twitter very well. right.ng is that ken is you cannot take one stock, and emphasize what appears to be a bad call now, and judge a money manager on the strength or weakness at that one investment. you have to look at a career. betty: we don't know yet about herbalife. say, this isu can investors and hedge funds. the model tends to result in a lot of volatility. bill ackman had a phenomenal year at last year. he is having a terrible year this year. his problem is that some of his investors have short-term money in his funds. he raised long-term capital with
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his amsterdam fund and that insulates him from redemption requests. most of the investors in bill long andwand are in strong, trusting that he will deliver superior returns. those that are getting nervous, for example looking at valiant, may the inclined to pull their money. that is not a good thing. betty: how is your fund doing? you follow their filing and investments. l --like the activists, like the activists, we have exposure to activism. the last few months have been lumpy and we are down on the year as a result. there is no strategy that will work every quarter, every year. obviously, we feel strong both activism. betty: you're staying with that? ken: absolutely. betty: larry robbins, d do you
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read his mia coppola to investors? he said the last 90 days have been frustrating. i fell to protect your capital and mine from a draw down flat market. he said i deserve not to make money this year, the gazette not made money for you guys. obituariesriting the for hedge funds, is this further evidence of -- why are you paying these guys? ken: another investor with a great career. will continue to have a great career. it is not the first time he has not made money for his investors. if i'm not mistaken, two years ago, at least one of .arry's runs was over 85% if you are up 85% one year, you can take a down year, but you have to be prepared to write it
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through. i'm not sure if larry is saying he will not charge a management fee. he will struggle, but if he did not charge a management fee, that would be extraordinary. betty: thank you erik schatzker, theken the founder of 13-d activist fund. : you're looking at midtown manhattan. one person has died and another injured in a building collapse at 10:30 this morning -- that is when a large section of the ceiling collapsed. the building was undergoing a renovation. you are looking at live pictures. the building collapsed in midtown manhattan. a new hotel is being built at the site of the accident. they have no comments and are still gathering information. betty: thank you for that report
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. we will continue to monitor that situation, more ahead on bloomberg "markets." ♪
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betty: welcome back. i'm betty liu. let's go to europe where mark barton has the latest on the european trade. stocks are falling for the fourth day in five, down for the first week. let's put that aside. the stoxx 600 is on track for the biggest monthly ride since after a 9%1 decrease in the third quarter. the third quarter was the worst performer in four years. this month, every industry group
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has risen, the best performers are auto. they were the worst performing in the third quarters. here's something for you. the best performing european benchmark this month is germany. it is up today and this month, rising 12%. in the world, it is the third best performing benchmark. i'm not going to get you to answer, but which to global ranch marks outperformed in october? jamaica and argentina. sank 12% in the previous quarter. thus look at the euro against the dollar. it is rising today into this week. the first weekly gain against the dollar. for the month, it is the third currency.orming that is the expectation the ecb button inthe qe
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december. it did not change the negative -.35%.t rates in sweden, yields are falling. they have fallen for four days. encouraging news out of the eurozone. we do not have negative inflation in the eurozone, it is flat. from -.1 to flat inflation. that is a huge disparity between flat inflation and the ecb stall of just under 2%. that is it for me. betty: i'm glad you did not put me on the spot with the quiz. thank you, mark barton in london. for a look at the u.s. markets, abigail doolittle. you're looking at linkedin. abigail: it is surging after the
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boosted its year end revenue that exceeds expectation. they're looking for a $2.9 billion, up from two .9 5 billion. it is going through to the bottom line. that is well ahead of the 2:23.sus at it is a sign that the company's revamped sales efforts, and it investorg to quiten concerns of slowing growth. that is showing in the stocks. yesterday, shares were down .5%. now, year to date shares of linkedin are up nearly 7%. betty: thank you, abigail dues -- abigail doolittle. the company forecasted a
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year-end revenue that topped it ' projections. all the signs of a revamped sales force with an extension -- and expansion into education and topline growth. some perspective on linkedin and its resolve in today's west .oast wake up corey, tell me about user growth at linkedin. outy: that is only found that the u.s. has not had a single user in the u.s. since march. growth at linkedin is for a business that is more than a couple of years old. they said that at some time, as far as today goes, we are one month into the quarter. there are 400 million users. that is some thing. it is more growth than we saw from twitter, not near facebook,
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but the growth rates are improving for linkedin. looked the way that we at linkedin for the maturity to get more revenue from the subscriber, as a -- as it some, wraps in twitter, point in time, and facebook as well. we could look at how successful the new sales task is doing at squeezing costs out of the business and getting more dollars out of each user. betty: let's talk about that. explain what they are doing different with or salesforce, and why is it making a difference? ok, we just lost the link to corey in san francisco. we will try to get back to him. no, we have him back. are you there? corey: we're back to being linked. betty: i knew you're going to say something like that. corey: he could say we have been linked. betty: what do they do about
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their sales force? of thehe restructuring sales force caused difficulty in the numbers for the last couple of years. it in look like they were having problems on the outside, but internally jeff weiner decided there was a better way to organize things. we are seeing the increase in revenue per user and growth across every one of their businesses, double-digit growth. the most important and impressive thing is what they call it publishing. the stories that people are posting on linkedin that is causing users to go. you're seeing the marketing solutions. sports illustrated, the magazine, traditional publishing would kill for those kinds of growth rates. linkedin started from scratch, and it is seeing it take off with the growth slowing a little
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at 28%. 28% is a good number for a really big business. betty: thank you. that is it for bloomberg "markets." willberg "markets" continue throughout the day. the ceo of virgin america will be on bloomberg television and radio from the san francisco international airport to talk about debuting the first flight to hawaii. ♪
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matt: welcome to bloomberg. joining me is the manager of kkm management.
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the me ask you about the run up over the last month. we are up 9% since october. the year soth of far. we have been getting disappointing economic figures. does it make sense to you? >> you can see the momentum of taking place. the fed hinted they could move sooner. be a catalyst. economic conditions are moving a little better than we are seeing in the rearview mirror. the expectations are that they will get better. we have seen a significant run-up in the market. since 2011. the fact that it is being led by significantps is since it is dialed up significantly in the s&p. matt: you mentioned in a note that you do not see money coming out of the bond market quick enough. with that come quicker if we do
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get a move in december? dan: it feels like it, matt. when we are watching the run up, the one caveat we had was the momentum play right have been a reaction. the money the bond market was not coming out. the move,they hit maybe something a little sooner, you're seeing the bond market showingwe this -- weakness. property breaking down. i believe that you are starting to see some of the money flowing into the stock market to support the rally. matt: you saw d rotation within the equity market, though we are not seeing this happen today. generally, you see money coming out of utilities, health care, and into financials, right? dan: financials and the consumer area ofs another strength. over the last month, you have seen health care and utilities
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come under pressure with a hint that interest rates are moving sooner. the utilities sector is under pressure. look for outperformance on consumer staples, discretionary's, and there may be a rate increase coming sooner rather than later. kellogg's, the company near and dear to my heart growing up, looking at seeing the locks moving into the new year, i think it is well. i am looking at a 72 or 72.5 percent call spread. they could push to 80 and the next quarter. betty: more bloomberg "markets" after this short break. ♪ buddy- nice place, nice car what happened?
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what's my credit score? your credit score is 650. that's magic! no, that's credit sesame.com you get so much more than a free credit score so do more with your score at credit sesame.com york, 4:00on in new p.m. in london. welcome to the bloomberg "market day."
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from the bloomberg headquarters in new york, i am scarlet fu. lix: i am alix steel. that the holiday shopping battles begin. target wanting to get the edge on walmart by offering free shipping. scarlet: what the days earning reports a about tomorrow's prospects. alix: let's get started with a wrapup of the activity. matt miller has the latest. it is so good to see you. matt: there's a lot of news. let's get to it. the indexes, not a lot of movement

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